A simplified ‘ISA warehouse’ should appear on the pensions dashboard for those considering the product as part of their retirement savings, Michael Johnson has said.
Speaking at the AMPS Annual Conference on 23 May, Centre for Policy Studies fellow Michael Johnson (pictured) called for a simplified ‘ISA warehouse’ to be included on the pension dashboard, which is currently in development.
He said: “For many people, cash ISAs, stocks and shares ISAs and one day the lifetime ISA (LISA) are a substantial part of their total savings. I think it’s informative at the very least to be able to see the ISA alongside any pension pots that you happen to have lying around. Many people think of them as part of their retirement savings.”
Johnson, a strong supporter of the ISA-style pension system rejected by the government last year, still believes pensions will be wiped out entirely in exchange for ISA products.
He is a vocal critical of the current pension tax relief system, which he said, did very little to encourage consumer saving.
‘Vested interest’
The dashboard will allow people to see all their pension savings, including the State Pension and final salary schemes, in one place.
Johnson thought it was feasible that ISAs could appear on the dashboard, but said many within the pensions industry had a vested interest in not seeing it happen.
However, the Association of British Insurers, the body that manages the development of the dashboard, did not rule it out entirely.
A spokesperson said: “The focus in the first instance has to be on sorting out all the pension information, because that is a very sizeable and complicated job.
“From our point of view it’s important that gets done first, but we see the value of other products being added in, and can envisage ISAs being a part of that in the future.”
‘ISA warehouse’
Johnson said the implementation of the dashboard provided a “golden opportunity” to simplify the ISA landscape.
“We have a multiplicity of different ISAs, I would like them all corralled into what I would call an ‘ISA warehouse,'”, he said, “the big ones are the cash ISA, the stocks and shares ISA and over time the lifetime ISA, and there is absolutely no reason why they couldn’t be consolidated into one vehicle.”
By consolidating the ISAs into one, Johnson said this could encourage those saving purely in cash to invest into a diversified investment holding.
He said: “The observation that people with any degree of financial literacy make is holding cash in a cash ISA for most people is actually not very sensible, but most people are extremely uncomfortable with the idea of anything to do with what we might refer to as ‘investing’.
“This could all be brought together inside a LISA with a ‘default’ fund for those that don’t like the word ‘investment’.”
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